How Utilities’ Returns Compare with Broader Markets’



Total returns

Utility stocks, generally seen as bond substitutes due to their stable dividends, have rallied significantly. Amid broader market uncertainty driven by geopolitical tensions, investors have turned to safer utility stocks. 


Sign up for Bagels & Stox, our witty take on the top market and investment news, straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

Utilities have outperformed broader markets over the past year, with the Utilities Select Sector SDPR ETF (XLU) returning 18% and the S&P 500 returning 11% (considering both capital appreciation and dividends).

Article continues below advertisement

Averaged over the last five years, utilities (IDU) have returned 10% compounded annually, in line with broader markets. Currently, utility stocks’ average dividend yield is 3.1%, higher than broader markets’ yields and the benchmark Treasury yields. Like dividend yields, dividend growth is a major driver of investors’ long-term returns.


More From Market Realist